‘Red flags’ in higher education finances

The US tax authorities, the Internal Revenue Service (IRS), recently conducted a survey of higher education institutions in order to ascertain how well their finances are being managed. The conclusion was, on the whole, positive, and the IRS found that the institutions were prudent and responsible with the resources at their disposal. But the report does identify some ‘red flags’: chiefly these were concerned with the remuneration of management officials and some top academics, as well as the benefits made available to athletics coaches; but another concern was related to ‘risky investments’ in some colleges.

The institutions surveyed also delivered the data to Ernest & Young in order to get their own assessment of the information, and the resulting report was published last week. One of the findings was, at least to an Irish reader, remarkable: that the average salary of an athletics coach was over twice that of a college president. Although I believe sports to be a very important part of what a university should promote, I cannot help feeling that in some American institutions this has got out of all proportion.

From the perspective of the institutions surveyed, the results in general are encouraging. The report is positive about the administration of finances and the existence of policies that help to secure good practice, including policies on conflicts of interest. But with the climate we now have, the question of whether salaries are proportionate to the role being carried out and appropriate in terms of comparability will need to be addressed.

Here in Ireland salaries are much more tightly regulated, but a more general assessment of financial management may come out of the ‘forensic audit’ that the Minister for Education has entrusted to the Comptroller and Auditor General. Although I have been wary of the context in which this audit was requested, it may be that it will help to build confidence in the ability of the Irish universities and colleges to manage their financial affairs, and such confidence is vital if the institutions are to be encouraged to be innovative and reform-minded. The US survey by the IRS may provide some useful comparative material.

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6 Comments on “‘Red flags’ in higher education finances”

  1. apoch632 Says:

    American college sports though are huge source of finance for the Uni’s over there though are they now. The University of Michigan has a gigantic stadium which they regularly fill and they are not alone in this.

    • apoch632 Says:

      American college sports though are huge source of finance for the Uni’s over there though are they not? The University of Michigan has a gigantic stadium which they regularly fill and they are not alone in this. While they may pay coaches huge amounts its usually paying for itself is it not?

      • Jilly Says:

        I can’t remember where I’ve seen this, but I’ve definitely read that sports, with its giant stadia and giant salaries, are a loss-leader for most US universities, but are typically felt to be essential for keeping the richer alumni on side. I think that’s pretty appauling, but then I hate sport anyway, so I’m not unbiased on this issue!

  2. Iain Says:

    I think you are right there Jilly (on both the loss making and the sheer tedium of sport!!). There’s been much discussion of this issue over the years in the Chronicle and numerous books have been published on the theme as well. Many universities feel trapped into having high profile sports associated with their campus but they are not large sources of income since the costs of competing at a high level are massive.

    Some of this was raised in the fascinating documentery programme “Declining by Degrees” and other aspects of how universities organise their internal management structures, the perceived pressures etc were more recently captured in “Wannabe U”



  3. I confess I do like sports, at least as a spectator, and believe that sport has an important role to play in community building in a university. But it needs to be kept in perspective, and the idea that an athletics coach could be the highest earner in a university by a margin of 250 per cent or so seems absurd.

    However, money spent on sporting facilities and activities does pay off in recruitment terms.

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